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Is the EU ready to renew its engagement with more advanced developing countries?

The EU has not escaped the global conversation on how to come to terms with a world where some countries have made substantial development progress but still face many challenges. These countries are both competitors and necessary allies to Western countries on political and economic matters. Some argue that the EU’s experience with middle-income countries (MICs) is unique, due to its cooperation in the neighbourhood, its experience with countries prior to their accession to the Union, pre-accession experience and its ongoing engagement with strategic partners. The EU would, therefore, be well positioned to bring its relationship with MICs and more advanced developing countries (MADCs) to the next level. But is it? Potentially, yes. But some bold steps are needed to realise this potential.

MADCs and ‘tailoring’: The making of new concepts

The EU Global Strategy and the new European Consensus on Development present the drivers for this discussion within the Union. They recognise that MICs and MADCs are very diverse, still have many development needs, and are especially important for the EU. On the one hand, stability and prosperity in the neighbourhood are fundamental for the Union’s own security. On the other hand, the global aspirations of the 2030 Agenda cannot be realised without these countries. The EU looks at some of those as leaders in their regions. They are also fundamental to the good functioning of the multilateral order. The guidance offered by these overarching documents is, however, limited.

There are few details on how to reconcile these different drivers and multiple objectives. The malleable category of the MADCs could include countries that are no longer aid recipient but also some low middle-income countries. The concept of ‘tailoring’, introduced by the EU Global Strategy and the new European Consensus on Development, has multiple meanings. For some actors, it means adapting the engagement to European interests. For others, ‘tailoring’ is about endorsing outcomes of EU-partners dialogue based on mutual interests. Finally, ‘tailoring’ could mean the smart use of the rich toolbox that the EU has at its disposal.

Some degree of ambiguity could be beneficial to entrust the EU with the managerial and political agility to respond to different contexts and objectives in vastly diverse countries. For others, the risks of a piecemeal approach, transactional bilateralism and a loss of accountability are too high, and they would like more clarity and direction.

The appetite for dedicated policy guidance or a list of countries to specify what MADCs are in practice is low, but the void left in the discussion could be detrimental to the definition of a more coherent, effective and innovative approach.

The need for a more consistent yet tailored approach

In the current set of EU external financing instruments (EFIs) and their underlying policies, countries with similar challenges can be treated differently due to EU settings, rather than their needs or even relevance to the EU. One example is the way the Agenda for Change, a policy aimed at focusing EU aid on the poorest countries, has been translated into different EFIs. Under the Development Cooperation Instrument, richer countries are graduated out of bilateral EU aid. A more nuanced approach exists under the European Development Fund. The European Neighbourhood Instrument adopts a ‘more for more’ approach. Other instruments are global in scope and others fully dedicated to EU strategic partners, some of which are MICs.

European aid to middle-income countries increased steadily in the last decade, up to about 58% of its bilateral assistance in 2016, mainly due to large resources to Turkey and a stronger focus on Europe and the Middle East. Large differences exist between instruments and countries, but some actors say that the EU should focus much more on least developed countries (LDCs) and use aid resources for poverty alleviation and, in the longer term, eradication.

Exploiting the rich EU toolbox

In the context of a potentially shrinking post-2020 EU budget, the discussion on MICs and MADCs risks to be tainted by the preoccupation to protect resources to LDCs and the neighbourhood from being shifted towards other priorities. The trade-off is real and needs to be carefully looked at. But the discussion on the EU’s engagement with MICs and MADCs is much broader.

A wide range of tools are available to the Union, including political and policy dialogue, policy coherence for development, knowledge sharing and peer-to-peer technical exchanges between public administrations, blending, and others. Official development assistance (ODA) is an important public, non-profit-seeking resource for development also in MICs. Yet its targeted use for strategic initiatives or for the support of civil society could result more important than its quantity. Politically-informed engagement on common agendas with a wide set of national actors needs to be factored in.

Rather than investing in a single modality, the EU should make use of its financial, political and technical toolbox as a package, where various tools can be adapted to different circumstances. However, this needs to happen under the umbrella of clear and shared objectives in the Union, and in dialogue with third countries. Better division of labour and greater collaboration among EU member states whenever possible could be a win-win option for an EU more in step with the times. It could also help to solve some of the anxieties of those member states who are concerned with protecting the funds for their priority areas.

Will the single instrument do the trick?

A simplification of the EU external financing architecture under a proposed single instrument could be beneficial for a more flexible, consistent and synergic offer to MICs and MADCs. But much will depend on how it will be internally organised – for example, between thematic and geographic programmes, whether graduation out of bilateral aid will be rediscussed and what the destiny of ODA benchmarking will be.

Better cooperation between the EU and MICs and MADCs requires a change in EU ways of working well beyond the design of its external instruments. For instance, it requires EU delegations to be able to take more initiative at the country level, in line with EU objectives and country demands, staff skilled to deal with complex policy issues and diverse actors and greater coordination among those EU institutions that work on internal and external policies.

The future is with us already. Will the EU be able to trail the path? The negotiations for the next EU budget provide an opportunity to do so. Let’s be sure to make the most of the journey.

The views expressed are those of the authors and not necessarily those of ECDPM.

In addition to structural support by ECDPM’s institutional partners: The Netherlands, Belgium, Estonia, Finland, Ireland, Luxembourg, Sweden, Switzerland, Denmark and Austria, this publication also benefits from funding by UK aid from the Department for International Development (DFID), United Kingdom.

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Comments

Mariella Di Ciommo

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2018-03-29 16:00:39

Dear John, good you get in touch with your comments. Our main argument, as I think the blog makes clear, is that the EU has to make some substantial improvements to be in a good position to work with more advanced developing countries so I hope you can recognise that. However, the research shows that some interesting building blocks are in place. They are not enough for a fully fledged approach, but this needs to be recognised in the spirit of an informed and constructive discussion. On the so called single instrument the blog makes clear that its ability to improve current action will depend on how it will be organised. We also discuss that the EU needs to rethink some of its ways of working. The supposed single instrument remains one element of a broader architecture that needs to be in place. So your point on the difficulty of the development work is well taken and we very much agree. On blended finance: this is a specific modality and we did not want to talk about any specific approach in this blog. We do look at blended finance into the longer paper that will follow this blog shortly as well as to technical assistance, peer-to-peer exchanges, grants and trilateral cooperation among others. We make the point that blended finance can be useful but its contribution to sustainable development needs to be clearly evidenced and more geared towards local businesses. Sorry to hear that your assessment of our work is that negative. Even so, I would invite to read the forthcoming paper where we do put forward some more detailed (hopefully good) ideas for consideration from yourself and others.

John Gibb

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2018-03-28 13:32:26

A few points for your consideration.
1. The EU’s experience with middle-income countries (MICs) is NOTHING TO BE PROUD OF: its cooperation in the neighbourhood has nothing to show for it, its experience with countries prior to their accession to the Union - Commission and member states fall down on the job by permitting countries to accede before they are ready. Bulgaria and Romania the most extreme and obvious examples.
2. The Commission has neither the staff nor expertise to develop and manage programmes. It is not cost effective, efficient or accountable. So a single instrument will not do the trick. There is no sleight of hand. Development is a difficult business.
3. Despite the blog title,it makes no mention of the key/leading role the EIB can and should play. MICS/MADS should be borrowing from the market or graduation to IBRD or equivalent lending.Thus ignoring a massive source of concessional but loan finance. Even now the EU/COM/EIB do not offer blend finance. Please prove me wrong-with concrete examples.
4. ECDPM needs to think harder about the fundamental reasons that development is not working in a sustainable way. The papers embedded in the blog are an embarrassment to read-and only too familiar as acronyms, jargon and ideas are rehashed. Nothing there that connects to people living in DRC, Angola, CAR etc

European external affairsEU Development Policy and PracticeMiddle Income Countries (MIC)